Question 1

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

Accepted Answer

A) True 
 B)False

Question 2

The process of developing budget estimates by requiring all levels of management to estimate sales,production,and other operating data as though operations were being initiated for the first time is referred to as:

Accepted Answer

A) flexible budgeting. 
B) continuous budgeting. 
C) zero-based budgeting. 
D) master budgeting.

Question 3

Standard and actual costs for direct labor for the manufacture of 1,500 units of product were as follows:

Accepted Answer

The answer of Standard and actual costs for direct labor...

Question 4

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials quantity variance was $2,200 favorable.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the information provided for Executive Inc.What is the direct labor rate variance?

Accepted Answer

A) $3,000 unfavorable 
B) $3,000 favorable 
C) $2,400 unfavorable 
D) $2,400 favorable

Question 6

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity,the variance is termed:

Accepted Answer

A) controllable variance. 
B) price variance. 
C) quantity variance. 
D) rate variance.

Question 7

Production estimates for August are as follows:

Accepted Answer

A) $1,260,000 for A; $630,000 for B. 
B) $1,080,000 for A; $540,000 for B. 
C) $1,125,000 for A; $562,500 for B. 
D) $1,170,000 for A; $585,000 for B.

Question 8

Prepare a monthly flexible selling expense budget for Podism Company for sales volumes of $270,000,$350,000,and $480,000,based on the following data:

Accepted Answer

The answer of Prepare a monthly flexible selling expense budget...

Question 9

Refer to the information provided for MetalHead Inc.What is the direct materials price variance?

Accepted Answer

A) $1,700 favorable 
B) $1,950 favorable 
C) $1,900 unfavorable 
D) $1,950 unfavorable

Question 10

The standard fixed factory overhead rate is based on 100% capacity of 50,000 direct labor hours.The standard costs and the actual costs for factory overhead for the production of 8,000 units during the current month were as follows:

Accepted Answer

A) $1.00 
B) $0.90 
C) $2.40 
D) $0.80

Question 11

Ideal standards are developed under conditions that assume no idle time,no machine breakdowns,and no materials spoilage.

Accepted Answer

A) True 
 B)False

Question 12

Employees view budgeting more positively when goals are established for them by senior management.

Accepted Answer

A) True 
 B)False

Question 13

The first budget customarily prepared as part of an entity's master budget is the:

Accepted Answer

A) production budget. 
B) cash budget. 
C) sales budget. 
D) direct materials purchases.

Question 14

Refer to the information provided for Efficient Corporation.The direct materials cost variance is:

Accepted Answer

A) $1,125 favorable. 
B) $4,750 unfavorable. 
C) $6,000 unfavorable. 
D) $7,125 unfavorable.

Question 15

The budget that summarizes future plans for the acquisition of fixed assets is the:

Accepted Answer

A) direct materials purchases budget. 
B) production budget. 
C) sales budget. 
D) capital expenditures budget.

Question 16

Which of the following formula is used to calculate direct labor rate variance?

Accepted Answer

A) Actual Costs + (Actual hours × Standard Rate) 
B) Actual costs - Standard cost 
C) (Actual hours × Standard rate)- Standard costs 
D) Actual costs - (Actual hours × Standard rate)

Question 17

The cash budget presents the expected inflow and outflow of cash for a specified period of time.

Accepted Answer

A) True 
 B)False

Question 18

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials price variance was $1,000 favorable.

Accepted Answer

A) True 
 B)False

Question 19

McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power.Total fixed costs are $23,000.At 9,000 units of production,a flexible budget would show:

Accepted Answer

A) variable costs of $49,500 and $25,875 of fixed costs. 
B) variable costs of $44,000 and $23,000 of fixed costs. 
C) variable costs of $49,500 and $23,000 of fixed costs. 
D) variable costs of $44,000 and $25,875 of fixed costs.

Question 20

For February,sales revenue is $300,000; sales commissions are 5% of sales; the sales manager's salary is $40,000; advertising expenses are $13,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $1,100 plus 1/2 of 1% of sales.Total selling expenses for the month of February are:

Accepted Answer

A) $71,000. 
B) $55,000. 
C) $58,600. 
D) $73,600.

Exam 13: Budgeting and Standard Cost Systems

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

The process of developing budget estimates by requiring all levels of management to estimate sales,production,and other operating data as though operations were being initiated for the first time is referred to as:

Standard and actual costs for direct labor for the manufacture of 1,500 units of product were as follows:

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials quantity variance was $2,200 favorable.

Refer to the information provided for Executive Inc.What is the direct labor rate variance?

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity,the variance is termed:

Production estimates for August are as follows:

Prepare a monthly flexible selling expense budget for Podism Company for sales volumes of $270,000,$350,000,and $480,000,based on the following data:

Refer to the information provided for MetalHead Inc.What is the direct materials price variance?

The standard fixed factory overhead rate is based on 100% capacity of 50,000 direct labor hours.The standard costs and the actual costs for factory overhead for the production of 8,000 units during the current month were as follows:

Ideal standards are developed under conditions that assume no idle time,no machine breakdowns,and no materials spoilage.

Employees view budgeting more positively when goals are established for them by senior management.

The first budget customarily prepared as part of an entity's master budget is the:

Refer to the information provided for Efficient Corporation.The direct materials cost variance is:

The budget that summarizes future plans for the acquisition of fixed assets is the:

Which of the following formula is used to calculate direct labor rate variance?

The cash budget presents the expected inflow and outflow of cash for a specified period of time.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials price variance was $1,000 favorable.

McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power.Total fixed costs are $23,000.At 9,000 units of production,a flexible budget would show: